Selection criteria that can facilitate grain yield improvement would be considered important plant breeding tools. We assessed the value of spectral reflectance indices (SRI) as indirect selection tools for grain yield improvement in winter wheat (Triticum aestivum L.). The objectives of this study were to estimate genetic correlation between SRI and grain yield, heritability, response to selection, correlated response of grain yield, and relative selection efficiency of SRI for grain yield improvement. Three field experiments consisting of 25 winter wheat cultivars and 2 sets of 25 recombinant inbred lines were conducted in the Oklahoma State University Agronomy Farm for 2 yr. Eight SRI were calculated at three growth stages (booting, heading, and grain‐filling). The water‐based indices (water index and normalized water indices) showed moderate to high heritability and higher genetic correlations with grain yield compared to the commonly used vegetation‐based indices (normalized difference vegetation index and simple ratio). The water‐based indices also showed higher correlated response than direct response for grain yield. Up to 83% of the top 25% highest‐yielding genotypes were selected by the two newly developed water‐based indices (normalized water index 3 [NWI‐3] and normalized water index 4 [NWI‐4]). These results suggest the strong genetic basis of NWI‐3 and NWI‐4 as potential selection tools for winter wheat grain yield improvement under Great Plains conditions.